October 3, 2006
Big Law's Grip on Corporate Legal Fees is Weakening
JD Hull’s post Do BigClients Need BigLaw More Than 10% of the Time might have been titled “In Praise of Mega Firms", for he points out that their reservoir of people and expansive geographic coverage is needed by clients—but only for about 10 percent of their legal needs. It is the largest 250 law firms, varying in size from 150 lawyers to 3200 lawyers that he includes in the mega firm category.
Or his post could have been titled “The BigClient Opportunity for UnBigLaw” since 90 percent of the legal needs of those clients can be fulfilled as effectively and certainly more economically by smaller firms (say 5 attorneys to 150 attorneys). That is the zone I call midsized and to which this blog is targeted.
Hull is right on target. Law departments know the economic and service quality benefits of using midsized law firms versus the usual mega firm suspects. The barrier to using midsized firms has to do with demographics. There are only 250 law firms that Hull includes in the BigLaw list. General Counsels know who they are. It has not been as easy for the corporate law departments to know who the 10,000 midsized firms are. But that barrier is becoming smaller.
The barrier that has kept a majority of big company business in the hands of BigLaw is crumbling against an onslaught of technology and transformations in how we communicate. Those same transformations of the business environment have given rise to a new economic reality—one Chris Anderson calls the Long Tail. These changes in our environment have already begun to alter the prospects of midsized firms when it comes to BigClient business. Technology, communications, and the Web are weakening the big firm hold on BigClient business. This is especially true when it comes to high-valued specialties. Make the right moves and prospective clients worldwide can now find you easily; even large corporations are starting to shop the internet for niche players in legal specialties.
Given changes afoot, the savvy law firm will increase its efforts to become more visible to BigClient law departments. Start increasing the firm’s annual expenditure on efforts to become more visible on the Web. A survey by Alyn-Weiss & Associates, Inc. disclosed that law firm web sites are now the single, most effective marketing tool employed by law firms engaged in corporate, transactional, and defense work. The Alyn-Weiss report surmised “that purchase patterns for legal services are clearly shifting, [and] Internet inquiry and research, whether a personal referral occurred or not, is increasingly commonplace for counsel and executives.” The survey found that 82 percent of surveyed law firms now get business over the Web. In the June 2006 issue of Law Office Management & Administration Report, IOMA noted that the data suggests the shift toward the growing importance of the Internet, and the firm’s visibility on it will only continue.
For more about the Long Tail theory or to purchase Anderson’s book of the same name, visit his web site, thelongtail.com.
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Filed under Marketing, Operations by Tom Collins